Developer Owen O'Callaghan believes that Irish house prices have fallen as low as they can go. Developers can't sell houses below cost.

The Corkman, whose interests include projects in London and Prague, is pressing ahead with planning work on two major west Dublin projects and one in Cork.

In Dublin he is formulating plans to upgrade Liffey Valley to a major new town centre, and also plans for his 90-acre section of the 320-acre Clonburris Strategic Development Zone whose overall development could be valued at €4bn.

He has also just got the green light for a €100m-plus mixed-use development next to his Mahon Point shopping centre in Cork.

Resilience

It's a mark of the resilience of the man that he is working on such sizeable projects despite the allegations that were made against him at the Mahon Tribunal as well as the criticism levelled against developers in the current economic crisis.

Not that he is immune to the controversies. He changed the status of his company O'Callaghan Properties (OCP) to unlimited some years ago and one of the factors was media coverage of its accounts.

More recently, he described remarks by Fine Gael leader Enda Kenny about delinquent developers as a "cheap shot".

"Just because a handful of developers lost the run of themselves in recent years around the country but mainly in Dublin" ... doesn't mean that all developers are like that ... "most of us have been working at this for years -- for us, 40 years next month".

A reflection of his long-term perspective is that he has bought very little Irish development land in recent years. He has had his Clonburris site since 1988. Instead his acquisition strategy has been mainly focussed overseas in the past three years although he did buy a site for office development in Cork about two years ago.

His group, which is worth about €350m, has also been more willing than some developers to sell off commercial developments.

He has also been willing to share the risk by taking partners on board, most notably the Duke of Westminster's company Grosvenor, which was originally a 50pc partner at Liffey Valley before it sold on a quarter share in the shopping centre to Morley, the Aviva investment arm.

Slow

These latter two are now seeking to sell on their stake in the existing centre for €300m. However, they have been slow to accept the bids they have received and have not reduced their asking price because, O'Callaghan says, "it's a great centre from an investor's point of view and from a tenant's point of view".

The decision on a new partner for the existing centre will not affect his expansion plans as the new Liffey Valley town will be developed by Barkhill Ltd, his joint venture with Grosvenor.

They intend to submit a planning application by the end of February which will encompass the 120 acres of the 187 acre site which have yet to be developed.

This will include 32,500sq m of new retail space including a new supermarket. It will also include 500 duplex homes and apartments as well as some own door offices, a library and community facilities.

He is hopeful that he can achieve planning permission which would allow work to start before the end of 2009 although no development funding is yet in place.

"We don't anticipate any great (funding) problem there. That's a very strong statement to make but Liffey Valley is a very successful centre. People come to Liffey Valley to shop and there's a queue of tenants to come here."

He also hopes to submit a planning application before the summer for his 90 acres at Clonburris. Other developers, Liam Carroll and Treasury Holdings as well as South Dublin County Council, own the other parts of Clonburris and O'Callaghan believes that a joint venture between the four land owners may be needed to provide the infrastructure which will be necessary before the construction work gets underway.

Although an SDZ, which allows for fast tracking of the planning process, the overall Clonburris scheme is expected to take 15 years to complete. It will accommodate 16,000 new homes, 57,000sq m of retail space and 200,000sq m of commercial and community space and have a value of up to €4bn when finished.

While he doesn't intend waiting until the other west Dublin SDZ at Adamstown is completed, nevertheless he doesn't expect to start work on the Clonburris site "until the market picks up a bit, possibly in 2010".

In the meantime O'Callaghan is also pressing ahead with the development of a €500m mixed use project in Cork city centre which he expects to complete by October. Spanning the former 'Examiner' newspaper offices in Academy Street, and with frontage onto Patrick Street and Half Moon Street, the development will include 300,000sq ft of retail space as well as 26,000sq ft of offices and 61 apartments.

It's a cracking location and with its 20,000sq ft Knightstbridge-style units it is already 70pc pre-let, he says.

Last week, he also received the green light from Cork City Council for a €100m-plus development next to his Mahon Point shopping centre.

Plans

These plans include 285 houses and apartments, a four-star hotel with 184 bedrooms and a small neighbourhood centre with retail units. Two of the blocks will rise to 12 and 16 storeys.

"Hopefully, with the market picking up it may start by the end of next year," he says.

"The credit crunch has got us to think about what projects we will start," he adds, pointing to the example of the 160,000sq ft offices he plans for Anderson Quay in Cork City centre.

"If we get planning we will hope to let part of it to get it off the ground but we have to have a pre-let before we can start," he explains.

He has also started work on a development with approval for 200 houses nearby at Lisheens, near his home town of Ballincollig. However, this has been very slow because of the market and so houses are now only being built to order.

Nearby he had completed and sold off 750 homes at Classics Lakes before the downturn. His other two major commercial Cork city projects are the Merchants Quay shopping centre, of which he has sold off about 85pc of the ownership, and the Mahon Point centre which is fully let.

He also developed and sold on The Golden Island shopping centre in Athlone some years ago.

Since the arrival of the credit crunch, his main change in strategy has been a reluctance to engage in some speculative development.

"We are not as bullish as we were. Apart from Liffey Valley, which is an exception, only the city centres of Cork and Dublin are worth considering for speculative developments with a mix of retail and offices. London is even worse than here as nothing is happening and there's an over supply," he says.

OCP currently owns four office blocks in the UK capital -- two in the West End and two in North London.

All are let, including Fitzroy House in the West End which it redeveloped.

On the other hand, he is more optimistic about prospects for the Czech capital, Prague, where he has bought 23 acres and secured planning permission for 230 houses. He is now looking for further development sites there.

"It hasn't suffered from a recession. There's no boom and bust. The market is steady with three-bedroom homes selling for around €225,000 each and development land about €100,000 per acre. Land prices are right and house prices are right. It just goes to prove how wrong we (in Ireland) got it.

"We have got to get real as we lost the run of ourselves. Now Irish (house) prices have gone as low as they can go. They are now priced at cost.

"Developers have to either lock them up or rent them out. They can't sell below cost. Buyers may be slow to take them but when the public realise this (the low prices) they may buy and there could be a slight pick-up."

- Donal Buckley Commercial Property Editor